Mark Zimmerman: Muscling in to the taxi lane

People around the world have used the Internet to circumvent government restrictions on freedoms. Now, on a smaller scale, it’s being used right here in Chapel Hill to do the same – by taxi patrons.

Only 18 months after Chapel Hill placed new regulations on local taxicab businesses, the Internet-based companies Uber and Lyft have brought their ride-sharing services to our community. As a result, people wanting to get across town have options.

In 2013, the Town of Chapel Hill revamped its ordinance governing taxi companies. Companies need to pay fees, register with and get cars inspected by the police, have drivers submit fingerprints, get drug tested, and “be clean in dress and in person at all times,” keep records of all trips, use different exterior color schemes, have heating, air conditioning, four doors, working windows and also be clean and sanitary. Additionally, new companies would only be able to apply for permits during certain times a year.

Finally, all the cabs would charge the same - a series of flat fees in the downtown zone and per mile charges elsewhere. Extra passengers and special events increased the charges.

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So far, Uber and Lyft have been able to operate outside the ordinance because they are not technically cab companies. They own no vehicles and employ no drivers. Through simple phone apps they merely connect people who want to go somewhere with someone who is willing to take them and handle a credit card payment from one to the other. Typically, passengers pay about 30 percent less than a traditional cab company. In Chapel Hill, the difference can be much greater. If several UNC students want to travel from fraternity court to the new Lux apartments, Uber estimates a charge of $4 and $5, while a regulated cab fee would be between $8 and $10.

When Uber and Lyft enter a market they are actually bringing back competition to the marketplace.

This doesn’t make taxi companies happy. They, and regulators, complain the Internet service rides are risky because they lack the inspections and controls of locally certified cabs. But Uber and Lyft, which operate around the world, explain they have high standards for vehicles, do background checks and interviews with drivers and require or provide more insurance than most local regulations stipulate.

Plus, their apps provide other useful benefits. A rider sees where cars are available and can track them as they come for a pick up. Riders rate drivers and cars, providing immediate customer feedback that future riders see before using a driver, alleviating the need for a government nanny. No cash changes hands. It’s a great consumer-focused application of the latest technology.

Local taxis also complain the costs and restrictions from local regulations unfairly burden them, but in part they have themselves to blame for that. The taxi regulations were touted as protecting the public but also helped protect the status quo.

Chapel Hill’s ordinance passed without objection from existing taxi companies. They were happy with the fee structure (which we now know was set artificially high). The other regulations raised barriers to entry for new competitors, which preserved their share of market.

This crony capitalism created something of a cab cartel that limited choice for the rest of us. Until, of course, the Internet services arrived to disrupt the system through the liberating power of innovation.

Freedom. There's an app for that.

Mark Zimmerman owns a business and lives in Chapel Hill. He can be reached at markrzim@gmail.com